196 HIGH COURT [ [HIGH COURT OF AUSTRALIA.) SUMNER AND OTHERS . . . ._ . APPELLAl APPLICANTS, AND CAMPBELL AND ANOTHER . t 3 . RESPONDEN RESPONDENTS, ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALES. H.C. or A. Moratorium—Company—W inding up—Order made prior to commencement of A 1935. Secured creditor—Proof of debt—Restoration of rights—Moratorium Act Ww (N.8.1V,) (No. 57 of 1932), sec. 34 (7) (c)- Sypyey, b April, 3,17. The Moratorium Act 1932 (N.S.W.), by sec. 34 (7), provides: " Nothin a in this section or in section twenty-five of the Moratorium Act" 1930- ae See (N.S.W.) "contained shall be construed so as to affect any right, power, and a remedy of the mortgagee for the recovery of any moneys secured by a mo of land and interest thereon in the event of . . . (c) an order being mat or resolution passed for the winding up of the mortgagor being a company. Held that the effect of sec. 34 (7) (c) is, in the event of the winding a company, to restore to a mortgagee thereof rights taken from him by Moratorium Act 1930-1931, irrespective of whether the winding up beg before or after the commencement of the Moratorium Act 1932. Decision of the Supreme Court of New South Wales (Full Court): In Property Insurance Co. Lid.; Ex parte Motor Credits Ltd., (1934) 35 S.R (N.S.W.) 1; 51 W.N. (N.S.W.) 199, reversed. Apprat from the Supreme Court of New South Wales. The Property Insurance Co. Ltd., a company incorporated in } South Wales, went into voluntary liquidation on 10th January and appointed Alexander Ewan Campbell liquidator. Real propert OF AUSTRALIA. 197 'of the company, situate at Pitt Street, Sydney, was subject to first H.C. o A. and second mortgages. The second mortgage secured a debt due to pees 'Motor Credits Ltd. The security was not sufficient to pay the Sumver principal and other moneys due under the first mortgage. On 20th Canboacn! 'February 1930 Motor Credits Ltd. submitted to the liquidatora claim = ~~ for £5,217 7s. 9d., and was later informed by the liquidator that the claim would be dealt with in the winding up. Nothing material transpired until 6th June 1934. On that date Motor Credits Ltd. d a proof of debt with the liquidator, in which it valued its urity at nil and claimed to prove as an unsecured creditor in the n of £5,217 7s. 9d. The liquidator rejected the proof of debt n the ground that the amount of the claim was secured by a ge of real property and Motor Credits Ltd. was debarred proving the claim by virtue of sec. 25 (7) of the Moratorium Act 930-1931 (N.S.W.). Upon a summons taken out in the Supreme ourt of New South Wales by Charles Henri Sumner and William , the liquidators of Motor Credits Ltd., and that company, et J. admitted the claim, following his decision in In re Middle- & Stone Ltd. (1). An appeal by the liquidator of Property nee Co. Ltd., and that company, was allowed by the Full Court Supreme Court: In re Property Insurance Co. Ltd. ; Ex parte or Oredits Ltd. (2). that decision the applicants now appealed to the High Court. Thomas Bavin K.C. (with him Henry), for the appellants. decision of Street J. in In re Middlebrook & Stone Ltd. (1), and this case, was correct and should be upheld. The principle of etation that should be applied in construing sec. 34 (7) of Moratorium Act 1932 is that laid down by Isaacs J. in Adams v. Commissioners of Taxation (3). It is not sufficient to have regard nly to the words "in the event of . . . an order being made" h 34 (7) (c), and to say that they have a prospective and not trospective significance ; cognizance must be taken of the general and purpose of the Act as a whole. The intention of the e as expressed in sub-sec. 7 of sec. 34 was that where there (1) (1934) 51 W.N. (N.S.W.) 103. (2) (1934) 35 S.R. (N.S.W.) 1; 51 W.N. (N.S.W,) 199, (3) (1910) 10 C.L.R. 180, at p. 199. 'LC, or A. 1935. Sumver CAMPBELL. HIGH COURT [193 was a winding up the statutory restrictions placed upon mortgagees _ were not to have any application; in that set of circumstances — there no longer remained any reason for giving the mortgagor company the benefit of the moratorium legislation, or for restricting the rights of the mortgagee. It is arbitrary and unjust to draw a distinction between a future winding up and one that has already commenced. Accrued rights are preserved by sec. 3 of the Act, By sec. 34 (7) the Legislature sought to overcome the effect of the decision in In re Paul & Gray Ltd. (1). In sec. 34 (7) the Legislature dealt with a certain state of facts, and was not concerned with ti The difference between the language used in sec. 25 (7) of the 1930-193) L Act and the language used in sec. 34 (7) of the 1932 Act is notable, Tf sec, 34 (7) does not have a retrospective operation, then the rafereng ) therein to sec. 25 of the 1930-1931 Act is meaningless, because, in of the repeal of that Act by sec. 3 of the 1932 Act, sec. 25 does affect the rights of creditors in a winding up which began after th commencement of the 1932 Act. The repeal of the 1930-1931 Act had the effect of restoring, for some purposes, the personal covenan not operate to prevent this result. Sub-sec. 7 should be construe [ in such a way as not to affect any right, power or remedy of a mort- gagee in the event of the existence of a winding up order (Ato General v. Theobald (2) ). The words " shall be construed " in 34 (7) show that its provisions are declaratory, and apply to a windings up whether commenced before or after the 1932 A Upon any other construction a secured creditor would be in a w position than an unsecured creditor. Ward v. British Oak Ins Co. (3) is distinguishable. In that case the Court held that statutory provisions there under consideration were not retrospect so as to affect rights already vested. The proper principle of e struction to apply is stated in Craies on Statute Law, 3rd ed. (19: p. 94. Flannery K.C. (with him Street and Robert Smith), for the resp 1 dents. Words similar to those used in sec. 34 (7) were cons (1) (1932) 32 S.R. (N.S.W.) 386; 49 (2) (1890) 24 Q.B.D. 557, at p. 5 . W.N. (N.S.W.) 164. (3) (1932) 1 cE 392. "a RJ OF AUSTRALIA. held to indicate a prospective operation. The language of 34 (7) shows that its operation was restricted to events of the "specified nature occurring after the commencement of the 1932 Act. The words "in the event of" obviously refer to something which s of sec. 9 (2) (e), (f) and (g) of the Act. The canon of ction which should be applied is as stated in In re Athlumney ; x parte Wilson (2). The words in sec. 34 (7), "nothing in this " refer to the provision that before the personal covenant is it must be confirmed and the confirmation evidenced by a ate. Sec. 34 (7) was not intended to apply to a winding up e & Co. (3)). The words used should be given their literal J. referred to Re Anglo-French Co-operative Society Ltd. ; t parte Pelly (No. 2} (4).] questions of the preservation in a repealing statute of rights ed under the repealed statute, and what constitutes an accrued were dealt with in Abbott v. Minister for Lands (5). Cur. adv. vult. following written judgments were delivered :— J. The Moratorium Act 1932 (N.S.W.), sec. 34 (7), reads "Nothing in this section or in section twenty-five of oratorium Act contained shall be construed so as to affect any power, or remedy of the mortgagee for the recovery of any secured by a mortgage of land and interest thereon in the of—(a) a sequestration order being made against the mort- jor (b) the mortgagor executing a deed of assignment or of nt under the provisions of any bankruptcy law for the S being i in force ; or (c) an order being made or resolution passed t the winding up of the mortgagor being a company ; or (d) the 82) 1 K.B., at pp. 399, 400. (3) (1875) 1 Ch. D. 48, at p. 51. 2.Q.B. 547, at pp. 551,552. (4) (1884) 50 L.T. 754, at p. 755. (5) (1895) A.C. 425, at p. 431. 'the Court in Ward v. British Oak Insurance Co. (1) and were H.C. or A. 1935. Gea SuMNER v. CAMPBELL. April 17. H.C. oF A. 1935. we SuMNER v. CAMPBELL. Rich J. HIGH COURT iet estate of a deceased mortgagor being insolvent and being adn tered by or under the direction of any Court." The interpretation of this section is not free from difficulty, but I think that re before the passing of the Act and those afterwards commenced And this general view is not inconsistent with the language of h it by the judgment of Evatt J., which I have had an opportunity reading. In Re Anglo-French Co-operative Society Ltd.; Ex pa Pelly [No. 2] (1), a retrospective operation was given to the wot "being wound up," which were held to mean being wound up at or after the commencement of the Act in question. The appeal should be allowed and the order of Street J. restored Srarke J. Motor Credits Ltd. claimed to prove as an unse creditor in the winding up of Property Insurance Oo. Ltd. for a su of £5,217 7s. 9d., payable to it under a covenant in a second moi of property in Pitt Street, Sydney, from the Insurance Co. to i The Insurance Co. was in the course of voluntary winding up purs to a resolution passed on 10th January 1930. The Moratoriun Act 1930-1931 of New South Wales, sec. 25, had provided that a covenants, agreements or stipulations by a mortgagor for paymen or repayment of any mortgage moneys secured by a mortgage 0 real property should, except for the purpose of enabling a mortga to exercise all or any of his rights against the mortgaged prope be void and of no effect for any purpose whatsoever. (See Jn 1 Paul & Gray Ltd. (2); City Mutual Life Assurance Society Ltd. Smith (3).) But the Moratorium Act 1932, sec. 34 (7), provided " Nothing in this section or in section twenty-five of the Moratorii Act contained shall be construed so as to affect any right, power, remedy of the mortgagee for the recovery of any moneys sec by a mortgage of land and interest thereon in the event of . (c) an order being made or resolution passed for the winding up the mortgagor being a company." The Supreme Court of N (1) (1884) 50 L.T. 754. (2) (1932) 32 S.R. (N.S.W.) 184, 386 ; 49 W.N. (N.S.W.) 49, 164. (3) (1932) 48 C.L.R. 532. R.] OF AUSTRALIA. ¢, 34 (7) (c), upon its proper construction, was not retrospective n operation, and had no application to orders made or resolutions ed before the commencement of the Act. And the provisions ¢. 9, sub-sec. 2 (e), (f) and (g) were referred to in support of this . But it is plain that the construction of sec. 34 (7) adopted the Supreme Court is not universally true; thus it cannot be plied to par. (d)—'' the estate of a deceased mortgagor being olvent and being administered by or under the direction of any " Prima facie, it would seem that the words used in sec. 3 (7) (c) refer to future and not past events. But the purpose of section is clear ; it was to restore in certain cases rights which d been taken away by the Moratorium Act 1930-1931. It did not rights vested in creditors in any true sense, though they d by the provisions of sec. 25. The Courts lean against ting an Act so as to deprive a party of an accrued right, t such a presumption has no application to such an Act as the , Which is designed to restore and not to destroy rights. The shall affect the rights or remedies of a mortgagee for the recovery 'any moneys secured by a mortgage of land in case of winding up. - words "order being made or resolution passed" are not so tractable that, having regard to the character and other provisions e Act of 1932, they must be referred to some future event than the existence in fact of an order or resolution. e appeal should be allowed and the claim admitted to proof. x J. I have had an opportunity of reading the judgment d by Evatt J., and I agree, for the reasons which he gives, that etter construction of the language of sec. 34 (7) of the Moratorium 2 (N.S.W.) is that which makes the words " in the event of " be the nature of the right, power or remedy of the mortgagee tablished by the provision instead of treating them as modifying "shall be construed" and stating when temporally his tights, powers, and remedies shall be considered to exist. this construction removes the apparent incongruity between pars. ), (6) and (c) of the sub-section, on the one hand, and par. (d), Wales rejected the claim on the ground that the amending H- ©. or A. 1935. ia SumMNER v. CAMPBELL, Starke J. H.C. or A. 1935. ed, SuMNER v CAMPBELL. Dixon J. HIGH COURT on the other hand. Par. (d) upon its terms necessarily inch de estates of deceased mortgagors which, at the commencement of Act, are insolvent or in the course of administration by the Court, whereas, if " in the event of " be given a temporal meaning or effee pars. (a), (b) and (c) prima facie would, as the Supreme Court refer only to orders, deeds and resolutions made, executed and pi in the future. The construction harmonizes the provision with language of sec. 9 (2) (e) and (9), in which the use of the adverbi "where" makes the express allusion to past and future nat It has the great advantage of giving a meaning to the provis which is just and reasonable in policy. Notwithstanding Flannery's attempt to justify it on the ground that the Legisla may have intended not to disturb the shares in which assets n be distributed among creditors in bankruptcies and liquidat commenced before the Act, the contrary meaning does not appe to me reasonable, first, because dividends already paid on eith¢ view would not be affected, and secondly, because such an intention clearly cannot be imputed in the case of par. (d). We are concerned in this matter only with par. (¢) which, by reason of sec. 2 (2), would be severable from pars. (a), (b) and (d) 0 sub-sec. 7, if they or any of them were invalid. The question hoy far they are affected by sec. 109 of the Constitution, therefore, d not arise in this case. Tn my opinion the appeal should be allowed. Evarr J. Sec. 34 (7) of the Moratoriwm Act 1932 provides « follows : "Nothing in this section or in section twenty-five of the Moratorium t contained shall be construed so as to affect any right, power, or remedy o the mortgagee for the recovery of any moneys secured by a mortgage of and interest thereon in the event of—(a) a sequestration order being against the mortgagor; or (b) the mortgagor executing a deed of assig or of arrangement under the provisions of any bankruptcy law for the ti being in force ; or (c) an order being made or resolution passed for the up of the mortgagor being a company; or (d) the estate of a mortgagor being insolvent and being administered by or under the d any Court." OF AUSTRALIA. re December 21st, 1932 (the day on which the Moratorium Act was assented to) prevents the appellant mortgagee from proving liquidation. he judgment of the Full Court rests mainly upon the use of the ds " in the event of " in sec. 34 (7). These words, it is suggested, cative of futurity, and the judgment proceeds :— "The question which arises for decision in this matter is whether the sions of sec. 34 (7) of the Moratorium Act 1932 are retrospective in their ration. Before giving such a construction to an Act of Parliament one 'would require that it should either appear very clearly in the terms of the Act arise by necessary and distinct implication." (1). opinion is that this is not the correct method of approach to oblem which has arisen, and that no question of retrospectivity Moratorium Act 1932 placed restrictions upon the mortgagee's , powers and remedies for the recovery of the mortgage moneys. ¢. 34 (1) of the Moratorium Act 1932 requires that a confirma- be obtained from the mortgagor as a condition of the ee's commencing proceedings for the payment of the moneys, sec. 25 (1) of the Act of 1930 places a general ition upon the mortgagee's bringing proceedings for the breach y covenant of the mortgage, and sec. 25 (7) of the Moratorium invalidates all covenants for the payment or repayment moneys, excepting for the purpose of enabling a to exercise his rights against the mortgaged property. in relation to these restrictions upon the rights of the mort- : that sec, 34 (7) has to be understood. The overriding purpose sub-section is to remove the statutory restrictions in the s specified—in (a), (b), (c) and (d). In form the sub-section aspecial statutory rule as to the construction of the provisions e restrictive of a certain "right, power, or remedy of the e." The real question which arises is: What "right, or remedy" is to remain unimpaired by the statutory 8 referred to at the commencement of the sub-section ? answer, reference has to be made to all the words from recovery " to the end of the sub-section. All such words ) (1934) 35 S.R. (N.S.W), at p. 4; 51 W.N. (N.S.W)), at p. 200. H. C. oF A. 1935. Scie SuMNER v CAMPBELL. Evatt J. H.C. or A. 1935. SUMNER CAMPBELL. Evatt J. HIGH COURT [193% go to make up the description of the "right, power, or remedy which the sub-section expressly protects. In the result, the protecte d "right, power, or remedy " is to recover the mortgage moneys in any of four specified types of proceedings. If the sub-section is approached in this way, itis not possible to hold that any of the four types of proceedings must have comme prior to the passing of the sub-section itself. The words "in th event of' are quite capable of describing proceedings which hay already commenced, and they address themselves to the conting that a certain state of affairs is existing. This view of the sub section is strongly supported by sec. 7 (d) and by the use of words "being made," "executing," and " being made" in 7 (a), (b) and (c) respectively. The fallacy in the argument for the respondent is to overlook the fact that English is a " positional " language (cf. per Rich J. Dignan v. Australian Steamships Pty. Ltd. (1) ) and to treat t words "in the event of" and the four pars. (a), (6), (c) and (d) though they had been transposed to the commencement of the sub-section, Then the words would naturally and grammatically have been construed as relating to future events, and could not : regarded as part of the description of the "right, power, remedy" of the mortgagee to which special protection was accorded by the sub-section. The argument based on the doctrine against retrospectivity mistakes the chief purpose of the sub-section. The sub-section is not concerned with the question whether the events which have created the occasion for the creditors of the mortgagor instituti a special type of proceeding have occurred before or after commencement of the Act in which the sub-section occurs. Quoad the mortgagee, such an " occasion " is necessarily fortuitous, has considered that the restrictions which otherwise impede tne mortgagee should be regarded as non-existent in those insta where it is no longer possible to carry out the main purpose of th Moratorium Acts by saving the mortgagor from liquidation. (1) (1931) 45 C.L.R. 188, at p. 197. OF AUSTRALIA. 205 e has determined that in all such cases the mortgagee H.C. oF A. not be put in a worse condition than the other creditors os "mortgagor. Svatexn Evatt J a. 'aN J. I am of the same opinion as Rich, Dixon and |. whose judgments I have read. Appeal allowed with costs. Order of the Full Court discharged and order of Street J. restored. Respondents to pay costs of the Full Court appeal. for the appellants, Allen, Allen & Hemsley. ors for the respondents, F. A. Davenport & Mant. J.B.